Breakdown of the FHA 90 day flipping rule

The FHA Flip Rule, established in 2003 by the Federal Housing Administration (FHA), aims to protect homebuyers using FHA loans from predatory property flipping practices. This rule consists of two parts:

1. **The 90-Day Flip Rule**: Requires the seller to have owned the property for more than 90 days before a new purchase contract can be written for a buyer using an FHA loan.

2. **The 91-180 Day Flip Rule**: If the sale date falls between 91-180 days following the seller's acquisition of the property and the property is being sold for 100% or more over the price paid by the seller, a second appraisal is required. If the second appraisal is 5% or more below the first, the lower value must be used for the loan.

Exceptions to the rule include scenarios such as sales by government agencies, new construction homes, and sales within presidentially declared major disaster areas. The FHA Flip Rule intends to protect borrowers and maintain the stability of the FHA loan program, although it has garnered criticism for potentially stifling the housing market.

For those planning to purchase a home with an FHA loan, understanding the FHA Flip Rule is crucial to avoid potential complications and delays in the home buying process.